Euphoric response to Tata Housing project

Since I wrote last week about Tata's new low cost housing project http://anshuman-jaiswal.blogspot.com/2009/05/mr-tata-has-heard-me.html , there has been euphoric response. See this ET link http://economictimes.indiatimes.com/articleshow/4496483.cms . Success of this project will surely boost confidence of Tatas and other developers to start such project across India.

Mr. Tata has heard me!

Ya, I am right. Mr. Tata or perhaps CEO of Tata Housing, Mr. Brotin Banerjee has given much needed hearing to market demands. I am so delighted with launch of Tata Housing project for Low cost houses in the price band of Rs 3.9 lakh-6.7 lakh . These days, my predictions are proving correct. I will write more about those predictions in future posts. But for now, it’s great moment for Indian Housing sector. Since I wrote in May 2008 http://anshuman-jaiswal.blogspot.com/2008/05/housing-needs-nano.html ,there has been a great evolution of low costs models. Success of Tata Nano bookings has awakened top line conscious business houses to new source of revenues. All big industrial houses such as Tatas, Birlas, Ambanis and new age entrepreneurs should take a lesson from Tata’s low cost housing initiative and jump into the untouched, unserved markets of low cost housing for creating newer markets of middle class and lower middle class consumers. But I am surprised with poor coverage of this news, which according to me is transformational for Indian Housing sector. Let’s wait for more Low cost innovations coming from fast becoming Low Cost Capital of the world, India.

Housing needs a Nano

I would like to begin by expressing my appreciation for all of you who visited my blog and shared comments on last post. It was startling and exciting to know so many diverse thoughts and opinions. Some agreed, some disagreed, but one thing evident was everyone’s zeal about development in India. I believe no one would disagree with me on this.
Last week an article caught my eye. It was about affordable housing in India. http://www.business-standard.com/common/news_article.php?tab=r&autono=323039&subLeft=1&leftnm=1

Omaxe, a real state player is planning to spend 20 bn dollars on constructing 1 million low cost houses. This move should be applauded and placed in same category of low cost innovation same as No frills hotels(Ginger, Tata’s venture), No frills airlines(Kingfisher, SpiceJet, GoAir) and low cost car(Tata Nano).
Housing sector has long been ignored and underserved. An 2BHK apartment in India’s Big cities like Mumbai and Bangalore is dream for millions of people. Hardly any one in India’s big cities can think of house with front and backyard like we see here in US.
There are various reasons to this housing problem:
Lack of government support and priority for affordable housing: There is lot of financing agencies, various housing banks but reality is none of them have revolutionized housing finance sector barring few such as ICICI bank and HDFC.
Lot of Black money involved in Land transactions: People with black(unaccounted) money have been parking their money in land and real estate for long time. Since it’s unaccounted, it gives an edge to these people in buying a property. Moreover, it drives the prices upwards and makes it even more difficult for people with limited white incomes to full fill their basic need.
Arcane Laws: Because Land is a state subject and not a union or federal subject, there is no common policy framework in whole country. Laws vary from one state to other. And for bankrupt state governments, land revenue is lucrative source of earning but they treat housing and land transactions like a butcher who kills Hen that hatches golden eggs. High property taxes, corrupt Land revenue department, low IT penetration, lack of transparency hinder growth of this sector.
Lack of corporate involvement: Companies have always structured their offerings for people with high disposable incomes,NRIs etc. There have not been large scale offerings of quality and affordable housing.
But looks like exciting times have come and things are changing. While taking cue from Omaxe, Tatas could consider venturing into this untapped, high potential market with a Ginger or Nano version of housing product. Mr Tata, Are you listening?